OIL FUTURES: Crude edges higher on rising geopolitical tensions in Middle East

Crude oil futures rose in midmorning Asian trades Dec. 9 on escalating geopolitical tensions in the Middle East following the collapse of Bashar al-Assad's Syrian government.

At 11:44 am Singapore time (0344 GMT), the ICE February Brent futures contract was up 30 cents/b (0.42%) from the previous close at $71.42/b, while NYMEX January light sweet crude contract gained 32 cents/b (0.48%) from the previous close at $67.52/b.

Syrian rebels seized Damascus on Dec. 8, marking the collapse of Assad's regime after a swift offensive led by Hayat Tahrir al-Sham (HTS), a terrorist group. Suspected Israeli airstrikes on Syria's Damascus have provided a short-term buoy to the complex.

The apparent collapse of Assad's government is not likely to affect global oil markets as it presents little threat to supplies, Vitol's head Asia trader Mike Muller told an energy podcast on Dec. 8.

Syria's armed opposition fighters said they 'liberated' the capital Damascus on Dec. 8. and said Assad had fled the country. Whether or not he has left Syria is unclear.

The rebel coalition, led by HTS, advanced through Syria over the last week, claiming Aleppo, Hama, and Homs, which is a key city with major transport routes. Qatar, Saudi Arabia, Jordan, Egypt, Iraq, Iran, Turkey and Russia said in a joint statement that a "dangerous development" had occurred and called for a political solution.

"The fall of Syria's government is stirring the geopolitical pot in the Middle East, posing potential implications for Russia and Iran, both staunch allies of Syria. This development could nudge oil prices slightly higher at the start of trading, though any upward momentum may be short-lived," SPI Asset Management's Managing Partner Stephen Innes said.

Saudi Aramco cuts Jan OSPs to Asia

Saudi Aramco lowered all of its crude oil official selling prices to Asia, Northwest Europe and the Mediterranean for January deliveries while keeping differentials to North America unchanged for the month, according to a pricing list emailed Dec. 8.

For Aramco's flagship Arab Light crude in Asia, the differential against the average of Oman/Dubai was lower by 80 cents/b from December to plus 90 cents/b, according to the price list. Traders had expected cuts ranging from 60 cents/b to $1.30/b, according to an S&P Global Commodity Insights poll in late November.

"Saudi Arabia's recent decision to slash crude prices for Asia more than expected could dampen any rally," Innes added.

Bearish oil sentiments continued to weigh amid an impending supply glut in 2025 despite frail attempts by the cartel to delay the tapering of their production quotas coupled with weak demand from China, the world's largest importer of crude.

"While the reduction in oil supply by OPEC was more than expected, the market took the cue of weakening demand from OPEC's production restart delay. China's oil demand growth has been disappointing due to surprisingly strong electric vehicle sales," ANZ research analysts said in a note.

Dubai swaps

The February Dubai swap was pegged at $70.39/b at 10 am Singapore time (0200 GMT) Dec. 9, down 49 cents/b (0.69%) from the previous Asian close.

The January-February Dubai swap intermonth spread was pegged at 42 cents/b, lower by 3 cents/b over the same period, and the February-March Dubai swap intermonth spread was pegged at 28 cents/b, lesser 2 cents/b over the same period.

The February Brent-Dubai exchange of futures for swaps was pegged at $1.03/b, dropping 18 cents/b over the same period.